Sigma Company has the following capital structure: 30% debt, 15% preferred stock and 55% common stock. The firm's 15-year 7% annual coupon bonds is currently trading at $771.82 The firm's 8% annual dividend perpetual preferred stock with a par value of $100 is trading at $71.43. Their common stock is trading at $50. Their next dividend is expected to be $4.00. The growth rate is forecasted at 10%.. The risk-free rate is 8%, the beta of the stock is 1.4 and the market risk premium (Rm - Rf) is 14%. a) What is the new WACC if you take the average of the CAPM and dividend growth models to estimate the cost of equity. Assume a tax rate of 35% b) Explain to grandmother how WACC can be used for projects that are safer and risker than the current risk of the project?